Nevada non-compete agreement: how NRS 613.195 governs enforcement, the hourly-worker protection added in 2021, the mandatory reformation requirement, and the customer-follow rule that protects departing employees
Nevada governs non-competes by statute
Nevada is one of the states with a specific non-compete statute, NRS 613.195, which the legislature has amended several times in recent years to add employee protections. The statute establishes the requirements for enforceability, protects certain categories of workers, mandates reformation of overbroad agreements, and includes a distinctive rule about customers who voluntarily follow a departing employee.
The statute provides that a non-compete is void and unenforceable unless it is supported by valuable consideration, does not impose a restraint greater than is required for the protection of the employer, does not impose undue hardship on the employee, and imposes restrictions that are appropriate in relation to the valuable consideration supporting the agreement.
That last requirement — that the restrictions be "appropriate in relation to the valuable consideration" — is distinctive. Nevada ties the permissible scope of the restriction to the value the employer provided. An employer who gave the employee minimal consideration cannot impose a sweeping restriction; the restraint must be proportionate to what the employer gave.
The hourly-worker protection
In 2021, Nevada amended NRS 613.195 through AB 47 to prohibit non-competes against employees who are paid solely on an hourly wage basis, exclusive of tips or gratuities.
This protection is categorical. An employer cannot enter into or enforce a non-compete with an hourly worker regardless of the worker's wage rate, access to confidential information, or the employer's stated business justification. The protection applies to the manner of compensation — hourly versus salaried — rather than to an income threshold.
The hourly-worker protection is narrower than the income thresholds in states like Illinois, Colorado, Washington, and Oregon, because it protects only employees paid on an hourly basis rather than all employees below a certain income level. A salaried employee earning $40,000 is not protected by Nevada's hourly-worker provision, whereas the same employee would be protected by the income thresholds in several other states. But for the substantial portion of Nevada's workforce paid hourly — particularly in the state's dominant hospitality and gaming industries — the protection is significant.
The exclusion of tips and gratuities from the calculation matters in Nevada's economy. A casino dealer, server, or hospitality worker who earns a low hourly base wage supplemented by substantial tips is still "paid solely on an hourly wage basis" for purposes of the statute, and is therefore protected from non-competes regardless of total earnings including tips.
The mandatory reformation requirement
Nevada's approach to overbroad non-competes has a notable history. In Golden Road Motor Inn, Inc. v. Islam (2016) 132 Nev. 476, the Nevada Supreme Court held that courts could not "blue-pencil" or reform overbroad non-competes — an overbroad agreement was simply unenforceable. This placed Nevada among the strictest states, similar to Wisconsin's red-pencil doctrine.
The legislature responded in 2017 by amending NRS 613.195 to require reformation. The statute now provides that if an employer brings an action to enforce a non-compete and the court finds the agreement is supported by valuable consideration but contains limitations that are not reasonable and impose a greater restraint than necessary, the court "shall revise the covenant to the extent necessary and enforce the covenant as revised."
The word is "shall" — mandatory reformation. Nevada courts are now required to revise overbroad non-competes to reasonable terms and enforce the revised version, the same approach taken in Texas, Florida, and Ohio.
This legislative reversal of Golden Road moved Nevada from one of the strictest states (no reformation) to a reformation state (mandatory revision). The practical consequence is that Nevada employers no longer face total loss from overbroad drafting — the court will narrow the restriction rather than void it. For employees, this means that overbreadth alone is unlikely to free them from the restriction entirely; the court will revise rather than eliminate.
There is an important condition: mandatory reformation applies only when the agreement is supported by valuable consideration. If the agreement lacks adequate consideration, or fails another threshold requirement, the court doesn't reform it — the agreement is simply void.
The customer-follow rule
NRS 613.195 includes a distinctive provision protecting departing employees from restrictions on serving customers who voluntarily choose to follow them. The statute provides that a non-compete may not restrict a former employee from providing services to a former customer or client if the employee did not solicit the former customer or client, the customer or client voluntarily chose to leave and seek services from the former employee, and the former employee is otherwise complying with the limitations in the covenant as to time, geographical area, and scope of activity.
This rule recognizes a reality that many non-competes ignore: when an employee leaves, some customers may prefer to continue working with that employee based on the personal relationship and quality of service, independent of any solicitation. Nevada's statute protects the customer's freedom of choice — if the customer voluntarily follows the employee without solicitation, the non-compete cannot prevent the employee from providing services.
The protection has conditions. The employee must not have solicited the customer. The customer must have voluntarily chosen to follow. And the employee must otherwise comply with the non-compete's terms. An employee who actively solicits former customers, or who violates the non-compete's other restrictions, loses the protection of the customer-follow rule.
For employees in relationship-driven industries — financial advising, insurance, professional services, personal services — this provision is significant. It means that the natural migration of loyal customers who prefer to continue working with a trusted professional is protected, as long as the employee doesn't actively solicit and otherwise honors the agreement.
Legitimate business interests and consideration
For agreements that satisfy the threshold requirements (valuable consideration, not against an hourly worker), Nevada courts evaluate whether the non-compete protects a legitimate business interest and is reasonable in scope.
Nevada recognizes trade secrets, confidential business information, customer relationships, and specialized training as protectable interests. Nevada has adopted the Uniform Trade Secrets Act (NRS 600A), and the statutory definition informs the analysis.
On consideration, Nevada's statute requires "valuable consideration" but the courts have interpreted this flexibly. For new employees, the employment constitutes consideration. For existing employees, the consideration question turns on whether the employee received something of value — a raise, promotion, bonus, or other benefit — in exchange for the non-compete. The statutory requirement that restrictions be "appropriate in relation to the valuable consideration" means that the amount and nature of the consideration directly affects how broad a restriction the employer can enforce.
Duration and geographic scope
Nevada courts evaluate duration and geographic scope under the reasonableness standard, with the proportionality requirement tying the permissible scope to the consideration provided.
For duration, one year is generally reasonable. Two years is upheld in many circumstances. Restrictions beyond two years face scrutiny and must be justified by the protectable interest and the consideration provided.
For geographic scope, the restriction must correspond to the employer's competitive territory and the employee's area of responsibility. Nevada's economy is heavily concentrated in two metropolitan areas — Las Vegas (gaming, hospitality, entertainment, healthcare) and Reno (gaming, technology, logistics, manufacturing) — with the vast majority of commercial activity in the Las Vegas valley. Courts evaluate geographic restrictions with reference to these specific markets.
The gaming and hospitality industry creates distinctive non-compete dynamics. Casino executives, marketing professionals, and others with access to proprietary customer databases, marketing strategies, and high-value client relationships (particularly the "whale" players who drive significant revenue) are frequently subject to non-competes. The protectable interests in this context are often substantial, and the customer relationships can be extremely valuable.
The relationship to trade secret and non-disclosure law
Nevada's non-compete statute restricts where an employee can work, but it doesn't eliminate the employer's ability to protect confidential information through other means. The Nevada Uniform Trade Secrets Act provides a separate cause of action for misappropriation of trade secrets, including injunctive relief and damages, independent of any non-compete.
This distinction matters for employees subject to the hourly-worker protection or the customer-follow rule. Even when a non-compete is void or inapplicable, the former employer retains the right to prevent the misuse of genuine trade secrets. An hourly worker who is exempt from non-competes can still be sued for taking and using a confidential customer database. The customer-follow rule protects an employee from a non-compete when customers voluntarily migrate, but it doesn't authorize the employee to use the former employer's confidential pricing models or proprietary methods to serve those customers.
Non-disclosure agreements remain available as a protective tool in Nevada and are not subject to the non-compete statute's hourly-worker exclusion or consideration-proportionality requirements. An employer whose primary concern is protecting confidential information rather than preventing competition may rely on a well-drafted NDA, which restricts what the employee can disclose or use without restricting where the employee can work. For employees, this means that even when the non-compete is unenforceable, confidentiality obligations and trade-secret protections may still constrain conduct at a new employer.
The independent contractor question
Nevada's non-compete framework applies primarily to the employer-employee relationship. The treatment of restrictive covenants imposed on independent contractors raises distinct questions. While the statute's protections are framed around employees, the general reasonableness principles and the consideration-proportionality requirement inform how Nevada courts evaluate restrictions on contractors. The hourly-worker protection, by its terms, addresses employees paid on an hourly wage basis, and its application to independent contractors who bill hourly is less settled. Contractors subject to non-competes should evaluate their agreements under both the statutory framework and the general common-law reasonableness principles that Nevada courts apply.
The practical enforcement landscape
Nevada non-compete litigation is concentrated in the Eighth Judicial District Court (Clark County, Las Vegas) and the Second Judicial District Court (Washoe County, Reno), along with the federal District of Nevada. The Las Vegas courts handle the majority of cases given the concentration of the gaming and hospitality industry.
Enforcement is most common in gaming and hospitality, healthcare, technology, financial services, and professional services. The gaming industry's reliance on proprietary customer data and high-value relationships generates a distinctive category of non-compete disputes.
The hourly-worker protection has eliminated enforcement against a substantial portion of Nevada's workforce — the casino dealers, servers, housekeepers, and other hourly hospitality workers who form the backbone of the Las Vegas economy. The mandatory reformation requirement means that for the salaried employees who can be bound, overbroad agreements are revised rather than voided.
Litigation costs in Nevada are moderate: $20,000 to $125,000 through preliminary injunction is a reasonable range, with high-stakes gaming industry cases costing more.
What Nevada employees should know
If you're paid solely on an hourly wage basis (excluding tips), your non-compete is void under NRS 613.195. This protection applies regardless of your total earnings, including tips, and is particularly significant for hospitality and gaming workers.
If you're a salaried employee, your non-compete must be supported by valuable consideration, and the restrictions must be appropriate in relation to that consideration. An employer who gave you minimal consideration cannot impose a sweeping restriction.
If customers voluntarily choose to follow you after you leave — without your solicitation — the non-compete cannot prevent you from serving them, as long as you otherwise comply with the agreement's terms. This is a meaningful protection in relationship-driven industries.
If your non-compete is overbroad, Nevada courts will revise it to reasonable terms rather than voiding it (the mandatory reformation requirement). Challenging scope alone is unlikely to eliminate the restriction, but you can challenge whether the consideration was adequate and whether the restriction is proportionate to that consideration.
If you're negotiating a severance agreement, the proportionality requirement gives you arguments about the relationship between what the employer provided and what they can restrict.
The national overview positions Nevada as a moderate state with distinctive employee protections — the hourly-worker exclusion, the customer-follow rule, and the consideration-proportionality requirement provide meaningful safeguards, while the mandatory reformation requirement (following the 2017 legislative reversal of Golden Road) keeps the framework within the enforceable range rather than the strict-voidance category occupied by Wisconsin.